Nearly half a dozen dealers spoke to Economic Times old that Reliance Industries and BP fuel’s retail venture Jio-BP is developing a compensation plan for dealers. The business will support the dealers through a monthly rental programme for the next four months, beginning June 1. Jio-BP operates 1,400 retail gas stations.
The corporation has also planned to reduce diesel supply from 50 per cent to 10 per cent.
“As part of the assistance programme, we have been informed that the corporation will pay our monthly rent for the next four months. We will receive 10 per cent of the average diesel sales for October, November, and December 2021”, ET quoted a dealer as saying. According to corporate authorities, this is to prevent the closure of retail shops, as occurred in 2008.
The dealers noted that the company is developing different plans for its three dealer outlet formats — COCO (company-owned-company-operated), DODO (dealer-owned-dealer-operated), and CODO (company-owned-dealer-operated).
According to the dealers, RIL may alter or eliminate the programme after four months, depending on how the situation develops.
According to industry insiders, Jio-BP is losing Rs 17.3 per litre on petrol sales and Rs 24.5 per litre on diesel sales. Since February 2022, the company has lost Rs 1.5 billion in fuel retailing since pump prices have not been adjusted to reflect the rise in international crude oil and final product prices. Beginning this week, Jio-BP stations will offer gasoline and diesel at a price premium of Rs 3 per litre. Even at this high pricing, the corporation will face losses, the sources told ET.
Due to losses of Rs 10–12 per litre per day on diesel sales, Jio-BP practically decreased its fuel supply to its dealers on March 16. To date, the corporation has not restarted complete gasoline supply. Since April 6, oil marketing corporations have not changed fuel prices. Therefore, losses per litre have climbed to approximately Rs 20. Brent crude traded around $119.07 per barrel on Tuesday.
Morgan Stanley reported on June 6 that RIL’s gross refining margin reached a 20-year high of $17 per barrel and that RIL’s energy vertical is on track to record its greatest quarterly performance in over 20 years, and the petrochemicals margin is up quarter-on-quarter (QoQ) despite lockouts in China.
RIL operates the most complex twin refineries in Jamnagar, Gujarat, with around 1.4 million barrels of crude daily processing capacity.
“Reliance generates billions of dollars in profits by exporting diesel while starving domestic dealers. Why is the government not taking any action? It has been advised that we reduce overhead expenses and lay off employees. What will happen to our employees?” a merchant questioned.
He claimed that his monthly income from the retail store was approximately Rs 7 lakh, whereas Jio-BP compensation package covers only about Rs 3 lakh. “The dealers must repay billions of dollars in loans. Banks are approaching us for recovery. How will we repay the loans?” he told ET.
RIL stated in its earnings report, dated May 6, that domestic retail prices for gasoline and diesel have not risen in tandem with growing international costs, resulting in under-recoveries since February for the entire fuel retailing industry, including its joint venture Jio-BP. As a result, under-recoveries negatively influence both existing operations and the sector’s investment appetite.
Tuesday’s BSE closing price for RIL shares was Rs 2,772.50, up 0.20 per cent from the previous close.